Economics

Corruption and supervision costs in hierarchies

Article Abstract:

The effects of hierarchical monitoring on corruption are analyzed using a model that considers a principal and three agents. The model, which considers an incentive system to reduce implementation costs, indicates that monitoring systems could minimize corruption. However, they increase the risk of collusion wherein the agents coordinate to commit corruption. The possibility of external corruption depends on the wage incentive and the size of the bribe.

When do creditor rights work?

Article Abstract:

Bank credit data from 27 countries in Europe from 2002 ro 2005 were studied to determine the effectiveness of creditor rights in different conditions. It was found that creditor right enhancement significantly improves credit to companies onlyin countries with efficient court enforcement system. The potentials of reforming creditor rights not related to court proceedings are examined.

Law enforcement and legal presumptions

Article Abstract:

An analysis of which legal presumption implements a target level of corruption at lower general social costs is presented. It is concluded that favouring presumption of innocence can bring greater benefits than merely the minimization of verdict error costs.